In the wake of the recent split-decision ruling in the SEC vs. Ripple case, Kathryn Haun, Founder and CEO of crypto-focused investment firm Haun Ventures, has shared her insights on the matter. Haun — who has over six years of experience as a member of the board of directors of Coinbase and over eleven years experience of working for the U.S. Department of Justice — has consulted with legal colleagues and believes the court’s decision to differentiate between XRP itself and certain XRP transactions is reasonable.
According to Haun, the court’s decision aligns with the industry’s stance in upcoming cases against the SEC. She suggests that tokens are never “investment contracts” on their own. Instead, only binding contracts that impose post-sale obligations on the seller can be considered investment contracts. Therefore, tokens traded on exchanges or secondary markets would rarely qualify.
Haun draws parallels between tokens and other commodities like orange groves, whiskey casks, condos, and even beavers, stating that while these can be the subject of an investment contract, they are not investment contracts or securities themselves.
Haun also addresses Ripple’s argument for the “essential ingredients” test, which suggests that a contract imposing post-sale obligations on the seller and enabling the buyer to share in profits must exist before the Howey factors are considered. She believes that the Supreme Court will eventually adopt a version of this argument, rejecting the SEC’s claim that an “investment contract” can exist without any contract.
While Haun views the court’s decision as generally favorable for the industry, she expresses skepticism about the SEC’s desire for legal clarity. She suggests that the SEC benefits from the current confusion and that losing these issues on appeal could jeopardize its entire enforcement agenda.
Haun also emphasizes that these complex legal questions highlight the need for legislative intervention. She believes that the Ripple decision underscores the inadequacy of existing laws and jurisprudence to address the policy concerns raised by this technology. She calls for Congress, not unelected agencies, to make major policy decisions like this one.
In conclusion, Haun sees the Ripple decision as a catalyst for positive legislative changes in D.C. She believes that as more cases are decided and more courts engage with the broader principles at stake, the law will continue to evolve to better accommodate the unique challenges posed by the crypto industry.